The cryptocurrency market sentiment has not changed significantly over the past week and remains weak. Particularly worrisome is the weakness of Bitcoin, which is clearly having trouble breaking the $30,000 barrier and today slipped below $29,000 again. As a result, BTC's volatility has fallen back to multi-month lows, historically heralding its hard-to-assess sudden resurgence. The options market is pricing in a sideways trend as the most likely outcome, and as a result of the increase in volatility, it is estimating likely price declines. What could change the situation on BTC?
SEC vs ETFs
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Create account Try a demo Download mobile app Download mobile app- An important date for Bitcoin seems to be August 13 - that's when the SEC will decide on spot Bitcoin ETFs from the Chicago-based CBOE exchange-traded fund, the ArkInvest fund and 21Shares.
- If the applications meet with a denial, Bitcoin could experience at least a short-term correction because - until recently - the very positive sentiment about the massive BTC ETF applications would be challenged;
- At the same time, it is worth remembering that the decision on Grayscale will come in September, while the consideration of applications from BlackRock or Fidelity is scheduled for spring 2024.
- GlobalX institution updated its application for a cryptocurrency ETF (which is to combine Bitcoin futures with U.S. Treasury bonds) resubmitted it to the SEC naming exchange Coinbase (COIN.US) as a partner in sharing oversight of the fund.
KPMG 'praises' Bitcoin
- Global audit giant KPMG has issued a report analyzing Bitcoin in an ESG context.
- The institution pointed out that there is an apparent positive trend of miners pursuing zero-carbon BTC mining (it questioned the position of institutions pointing out the significant contribution of Bitcoin 'mining' to environmental pollution).
- KPMG described Bitcoin's programmed economy as exceptionally stable, emphasizing its predictable constancy and the lack of possible interventions by the network's central authority in transactions.
- Market observers picked up the report off-topic, pointing to interest in the 'Bitcoin economy' from institutions and a potential increase in attention directed toward Bitcoin at BlackRock - funds associated with pushing the ESG trend.
BITCOIN chart on the H4 interval indicates that the cryptocurrency is struggling to stay above the 23.6 Fibonacci retracement of the April 10, 2023 upward wave at 28,900 level. A drop below it could herald a retest of $27,000 (38,2 Fibo). The RSI at 43 points is still relatively close to neutral zone. Source: xStation5
Potentially important for BTC investors may be the dollar strength index (yellow line), which since mid-July has begun to rebound again from levels below 100 points to around 103 points today. Historically, bitcoin has repeatedly reacted by weakening at a time when the dollar was gaining. A strong dollar could herald general risk aversion and potentially negative for BTC higher inflation for longer (strong economy, higher inflationary pressure). Source: xStation5
Nearly 75% of Bitcoin's supply is in the hands of long-term investors, who are usually reluctant to sell. Short-term price movements are mainly determined by about 13% of short-term addresses. Source: Glassnode
Bloomberg Intelligence pointed to a persistent near-record 0.3 correlation with the Dow Jones Industrial Average which, with BTC's falling volatility and an uncertain macro outlook for Q3 and Q4 for the stock market, could herald a broader correction in risky assets. According to NYDIG's analysis, BTC's next halving in 2024 will have a much smaller impact on the cryptocurrency than previous ones. Source: Bloomberg Intelligence, Bloomberg Finance LP
